Pakistan RFO-based power generation declining

KARACHI: Pakistan’s reliance on Residual Fuel Oil (RFO) based power generation is declining gradually owing to increasing share of coal, hydel and re-gasified liquefied natural gas (RLNG) based generation. Energy mix is expected to improve with the upcoming China-Pakistan Economic Corridor (CPEC) power projects, whereby coal, hydel and wind are expected to contribute higher in the energy mix, diluting FO based generation from current 28.34 percent by Fiscal Year (FY) 2019-20 onwards, analysts said. In 2014, country’s 40 per cent of power generation was dependent on imported RFO which resulted in higher cost of power generation, alarming levels of circular debt and high import bills. “We expect RFO based generation to continue its declining trend owing to increasing reliance on Coal, Hydel and RLNG based generation” said Ailia Naeem, an analyst at BMA Research According to the National Electric Power Regulatory Authority (NEPRA), electricity generation in Pakistan for the month of August 2016 stood at 10,445GWh, representing 2 percent yearly growth. Average weighted fuel cost component of the industry depicted a decline of 8 percent Year on Year (YoY) settling at Rs 3.83/KWh), largely accounted for by a 45 percent YoY decline in Furnace Oil (FO) prices. The generation mix was dominated by hydel based generation, which accounted for 39.42 percent of energy mix, as compared to 28.345 percent RFO based 24.45 percent and gas based generation respectively. The yearly basis trend in generation mix showed a higher inclination towards gas based generation as compared to RFO based and hydel based generation.